Merko Ehitus net profit for 2021 grows to EUR 29 million

Merko Ehitus posted revenue of EUR 113 million for Q4 2021 and the corresponding figure for the entire year was close to EUR 340 million. The group’s net profit for Q4 grew by 40% to EUR 14 million and the annual net profit by 27% to EUR 29 million. In 2021, Merko handed over 500 apartments to buyers and launched construction of more than 1,450 new apartments. In coordination with the supervisory board, the group’s management board proposes to the general meeting of shareholders to pay one euro per share as dividends.

“The results for 2021 exceeded our expectations from a year ago, especially considering the rapid growth of construction prices and continuing major supply chain problems. We thank our teams and partners for their contribution and cooperation,” said Chairman of the Management Board of AS Merko Ehitus, Andres Trink regarding the results.

“Thanks to the active apartment market in all of the Baltic states, we were able to realize our potential in apartment sales close to the maximum last year. A large part of the apartments were completed and handed over to buyers in the fourth quarter, which had a significant impact on the results for the last quarter. The share of residential development in our business has grown in recent years and this strategy has thus far paid off. In the apartment development, we are more able to control the speed and cost of the development and construction process. This year we will continue investments into residential development, while following further developments on the apartment market,“ commented Andres Trink on the results of apartment development.

The residential and real estate business area provided a majority of the group’s 2021 profit. In 2021, Merko handed over 496 apartments and 7commercial premises to buyers and launched construction of a total of 1,462new apartments, which will be completed in 2022 and 2023. Of the finished apartments, few are still unsold and preliminary contracts cover over half of the ones under construction. The largest apartment development projects were Noblessneri, Uus-Veerenni, Odra, Metsatuka and Lahekalda in Tallinn, Erminurme in Tartu, Viesturdārzs and Mežpilsēta in Riga and Vilneles Skverai in Vilnius.

In 2021, Merko signed EUR 288 million worthnew construction contracts and the secured order-book balance reached EUR 257 million. “In connection with rising inflation, high energy prices and lasting supply chain problems, the situation on the construction market continues to be challenging. Long-term fixed-price contracts entail significant risks, which general construction contractors by themselves are not capable of assuming. More flexible pricing may be a solution. We shall certainly see difficulties on the construction market with timely fulfilment of existing contracts and likely will witness a rise in the price of new construction projects,” said Trink as regards construction services.

In Q4, the largest projects in progress were the third phase of the Mustamäe medical campus of the North-Estonia Medical Centre, the Tallinn School of Music and Ballet, St John’s School, the Liivalaia quarter’s zero-cycle construction works and the construction of infrastructure segments of the Republic of Estonia’s southeast land border. In Latvia, the Orkla wafer and biscuit production plant, GUSTAVS business centre, Elemental Skanste office buildings and NATO facilities in Ādaži and the Kauguri city park and youth house were in progress; and in Lithuania, infrastructure for a number of wind farms and the Kaunas district police headquarters building, NATO barracks and a production building for Continental Automotive.

AS Merko Ehitus (group.merko.ee) group consists of AS Merko Ehitus Eesti and Tallinna Teede AS in Estonia, SIA Merks in Latvia, UAB Merko Statyba in Lithuania and Peritus Entreprenør AS in Norway. Besides providing construction service as a general contractor, the group’s other major area of activity is apartment development. As at the end of 2021, the group employed 672 people, and the group’s revenue for 2021 was EUR 339 million.